Correlation Between Mantle and XY Oracle

Can any of the company-specific risk be diversified away by investing in both Mantle and XY Oracle at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mantle and XY Oracle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mantle and XY Oracle, you can compare the effects of market volatilities on Mantle and XY Oracle and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mantle with a short position of XY Oracle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mantle and XY Oracle.

Diversification Opportunities for Mantle and XY Oracle

0.55

Correlation Coefficient

Mantle  XY Oracle

Very weak diversification

The 3 months correlation between Mantle and XYO is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mantle and XY Oracle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XY Oracle and Mantle is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mantle are associated (or correlated) with XY Oracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XY Oracle has no effect on the direction of Mantle i.e., Mantle and XY Oracle go up and down completely randomly.

Pair Corralation between Mantle and XY Oracle

Assuming the 90 days trading horizon Mantle is expected to generate 17441.0 times less return on investment than XY Oracle. But when comparing it to its historical volatility, Mantle is 6.71 times less risky than XY Oracle. It trades about 0.0 of its potential returns per unit of risk. XY Oracle is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.89  in XY Oracle on November 28, 2024 and sell it today you would earn a total of  0.48  from holding XY Oracle or generate 54.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Mantle  vs.  XY Oracle

Mantle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mantle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mantle is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

XY Oracle

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in XY Oracle are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, XY Oracle exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mantle and XY Oracle

The main advantage of trading using opposite Mantle and XY Oracle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mantle position performs unexpectedly, XY Oracle can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in XY Oracle will offset losses from the drop in XY Oracle's long position.

The idea behind Mantle and XY Oracle pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.